Buyer Resources

Choose the Right Mortgage When Buying Pittsburgh Property

There are many financing options available to you when buying a home in Greater Pittsburgh. But how do you choose which one is right one for you?

The 7 Basic Types of Home Financing Options

Though there may seem like thousands of financing choices are available, there are actually only a few basic types of home mortgages to choose from, which can make your decision a bit easier.

Fixed-Rate Mortgage

Oldest and most popular loan type

Rate is constant over the life of the loan

Can be taken out in 10, 15, 20, or 30-year lengths

Adjustable-Rate Mortgage (ARM)

Interest rate fluctuates

Initial rate is typically low than comparable fixed-rate mortgage

Are tied to one-year Treasury bills or another specific index

Have caps to limit drastic changes in rates and payments

Two-Step Mortgage

Usually called 5/25s and 7/23s

Fixed interest rates for the first 5 or 7 years; then change to convertible or nonconvertible loans

Convertible: converts the loan to a fixed loan for the remaining 25 or 23 years

Nonconvertible: converts the loan to an ARM

Both are 30-year loans

Riskier than fixed rates, but less risky than ARMs

FHA Mortgage

Pre-set spending limits

Amounts are set by the median prices of different cities within a particular area

Only 5% down is required (sometimes 3%)

Steep mortgage insurance premium and other upfront costs are required

VA Loans

Designed to help military vets buy homes with no down payment

Not allowed to pay points; responsible for some fees

Seller usually has to pay the extra money

Balloon Mortgages

Can be any length

Some can be principal and interest; others only interest

Loan must be paid in full when it’s due: either amortized over 30 or 50 years and you pay the first 5 or 10 years before paying it off OR you only pay the interest until the loan is due

Shared-Appreciation Mortgages

Lender offers you a below-market rate in exchange for a share of the profits when the home is sold

You receive the tax benefits

Lender doesn’t make money unless you do

If home increases greatly in value, you’ll lose a lot of profit to the lender

Most common among first-time homebuyers working with non-profit groups that help low to moderate income families

How to Choose the Best Mortgage

To choose the best mortgage loan, you'll want to base your decision on several key factors, including your current monthly income, your future expected income, current assets, and your liabilities or debts. Here are a few questions you can consider when choosing a mortgage:

Do you want to pay the same amount each month?

Do you need a lower down payment?

Do you need to pay fewer up-front costs?

How long do you want to live in this home?

How quickly do you want to build equity?

Let Us Help You with the Details

Buying a home in Greater Pittsburgh can be challenging, but you don't have to do it alone. We can help you not only decide on the best mortgage but find your ideal home in your price range.

Contact us today and we can recommend trusted mortgage lenders in the Greater Pittsburgh area. Then you can start the pre-qualification process and learn which lender and loan will work best for you. Anytime you need assistance, we're here to help.